Regulators flawed in foreclosure oversight

There was much evidence, for instance, that mortgage servicers – responsible for collecting payment from borrowers and foreclosing when loans default – were charging improper fees and engaging in other questionable practices.

A 2007 study by Katherine Porter, a University of Iowa law professor, found that servicers often tried to seize people’s homes improperly, adding new fees when borrowers wanted to try saving them. She found that many servicers “lack the required documentation necessary to establish a valid debt.”

Her findings prompted a hearing by the Senate Judiciary Committee held in May 2008. Afterward, Sen. Charles E. Schumer (D-N.Y.), who chaired the hearing, concluded that mortgage servicers have “failed to keep even the most basic records to justify their claim.”